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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (24277)1/9/2005 9:11:20 AM
From: gregor_us  Read Replies (1) of 110194
 
The USD Rally is Too Sharp To Not Have its Own Corrective

internals that are likely to take over soon, likely this week. More broadly, the bounce/rally is not derived from any kind of sentiment bottom. There is no sense that the USDX had gone far enough, no sense of "recognition" that a rally is now sustainable. A sustainable rally could have been built from below 80.00, imo. If one suspects however the rally from 80.31 was "engineered" then IMO that engineering merely set the USD up for a more terrible fall.

Message 20929602

On the matter of USD trading analysis, I remain skeptical that review of the USDX Futures Contracts or the aggregate FX contracts (USD against the majors) gives the kind of Tell the same review would produce for things like copper, gold, oil, etc. I notice that Justin LaHart in the WSJ (Get Shorty)attempted this in early to mid December by looking at the USDX contracts. He concluded the anti-dollar trade was offside--which I suppose "everyone" agreed with at that time. However, I would point out that a Counter-Trend Consensus developed very quickly in December that a Dollar Rally was inevitable. On a very short-term level, I think this Counter-Trend consensus produced the hot and fresh Lows in the USDX in late December, after LaHart's article and to the surprise of the Dollar Rally Crowd.

I would not go so far to say that analysis of the Futures Contracts is without utility. Just that the entire world is long dollars, and the daily FX trade is 1.9 trillion with 90% of that volume involving the USD.

Best,

LP
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